UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
October 12, 1977
In the Matter of GRAND JURY SUBPOENA1
The opinion of the court was delivered by: STEWART
STEWART, District Judge.
This is a motion by an attorney ("Lawyer") to quash a subpoena commanding him to appear before a grand jury investigating possible fraud and possible plots to obstruct that investigation. Lawyer is an attorney whose firm represents a subject of the investigation ("Subject").
Subject was served with a subpoena duces tecum on or about July 25, 1977, returnable August 3, 1977, requiring it to present to the grand jury certain documents or records in its possession. Lawyer's firm was retained by Subject on August 1, 1977, to represent it in the grand jury investigation. Upon initial investigation, Lawyer was informed by Subject that there had been a burglary of Subject's premises some time prior to June 22, 1977,
and that most of the records sought by the subpoena were stolen in the burglary. Because it was not immediately clear which of the records had been stolen and, therefore, the extent of the clients' ability to comply with the subpoena was unknown, a member of Lawyer's firm submitted an affidavit stating the facts as known to him in support of a motion to modify the subpoena. Judge Goettel granted the motion in part extending the time to respond to the subpoena to August 8, 1977, and ordered that the facts surrounding the burglary be explained.
Lawyer proceeded to investigate the theft of the records, interviewing his clients and other persons with knowledge of the storage and theft of the documents. According to Lawyer, he intended that one of his clients would submit an affidavit setting forth the facts; but the clients refused to do so, citing the embarrassment that would result if their names were to be leaked in connection with grand jury testimony.
Instead, Lawyer submitted the affidavit in his own name, stating some facts of his own knowledge and others on information and belief. The essence of the affidavit is that there was a burglary of Subject's premises, which was reported on June 22, 1977, and that among the missing items were most of the records sought by the subpoena issued July 25, 1977.
The Government now seeks to have Lawyer testify before the grand jury. It is claimed that Lawyer was being used by Subject to obstruct the grand jury in its investigation of possible fraud when he submitted his affidavit containing facts related to him by Subject. Those facts, the Government contends, are untrue, in that either there was no burglary or, if there was a burglary, no records were stolen.
Lawyer, therefore, is claimed to be an unwitting instrument in Subject's plot to obstruct the investigation, because it was through his affidavit that the allegedly false facts were brought before the grand jury.
Lawyer seeks to quash the subpoena in its entirety. His communications with Subject are asserted to fall within the attorney/client privilege and thus may not be related to the grand jury. His interviews with other persons and with his clients he claims are privileged as attorney's work product.
As far as can be ascertained from the record, Lawyer interviewed two, possibly three, persons who are officials of Subject in putting together the facts in his affidavit. The relationship between Lawyer and the officials of Subject is, of course, one of attorney/client. The questions before this Court are then, whether the communications between Lawyer and his clients were privileged, and, if so, whether the privilege has been waived.
We assume for purposes of analysis that the communications were privileged,
but find that with respect to Lawyer's clients who testified before the grand jury, the attorney/client privilege has been waived, for two reasons. First, Lawyer's affidavit purports to set forth the sum and substance of his clients' communications to him concerning the storage and theft of the records. Second, Lawyer's clients were asked questions before the grand jury concerning what they had told Lawyer about the storage and theft of the records, and they answered, apparently unhesitatingly.
Under the circumstances, communications made between Lawyer and his clients had already been revealed in some detail, with the privilege knowingly waived by the clients. We find therefore that Lawyer's assertion of the attorney/client privilege, in light of all that has gone before, must fail. However, our inquiry does not end here.
WORK PRODUCT PRIVILEGE
Lawyer seeks to avoid testifying before the grand jury regarding all matters revealed to him in his investigation, asserting that all communications and all factual materials assembled in his investigation are protected by the work product privilege. The Government is seeking to have Lawyer reveal the sources and substance of all communications. We conclude that the Government has not demonstrated its need to bring Lawyer before the grand jury and to compel him to disclose such information.
As Judge Frankel stated in In re Terkeltoub, 256 F. Supp. 683, 686 (S.D.N.Y.1966), "disclosure of this kind will be compelled only in a 'rare situation' that may justify 'an exception to the policy underlying the privacy of [the attorney's] professional activities'. Hickman v. Taylor, [329 U.S. 495, 513, 67 S. Ct. 385, 395, 91 L. Ed. 451 (1947)]. . . . But we are not persuaded, balancing the claim of need for the testimony against the potential hurt of it, that there is any sufficient justification in this case." Applying Judge Frankel's balancing test to the facts here, we are also not persuaded that there is sufficient justification to compel Lawyer to appear and testify before the grand jury.
The Government seeks to establish that the subpoenaed records were in fact not stolen and that there is a plot to concoct a story about the missing records. Without making a judgment as to whether the records were actually stolen or whether there is a plot to obstruct the grand jury's investigation, it seems apparent that the Government has at its disposal all that it needs to conduct its investigation, without requiring Lawyer to appear before the grand jury. Lawyer has already provided the grand jury with an affidavit summing up his investigation. Further, Lawyer has offered to provide the grand jury with a list of persons with whom he spoke in the course of his investigation. The Government can call them as witnesses and provide the grand jury with their direct, rather than hearsay, testimony. Although the Government is normally free to introduce hearsay testimony before the grand jury, we see no reason to permit it to do so here, in abrogation of the asserted privilege, where witnesses are readily available to the Government to provide firsthand testimony.
Under these circumstances, where the Government has made an insufficient showing of need for Lawyer's testimony, the Court sees no "overriding necessity" to compel his appearance before the grand jury, and finds that there is "no showing of the kind of vital, urgent, and immediate need for the unique knowledge that might warrant the extraordinary compulsion the Government seeks." In re Terkeltoub, supra, 256 F. Supp. at 686.
Even if we were to decide that the communications related to a continuing illegality, we would still hold them protected under the circumstances here, In re Terkeltoub, supra. The fact that the communications were not made in the context of preparing for an impending trial does not alter our result. In re Grand Jury Investigation, Sturgis, 412 F. Supp. 943 (E.D.Pa.1976). In Sturgis, materials prepared after the issuance of a subpoena were held to be privileged, since the threat of litigation was at that point sufficiently real and imminent to invoke the privilege.
Id., at 948-949. We agree with the rationale in Sturgis that the receipt by the clients of subpoenas duces tecum provided a real and imminent threat of litigation, and that Lawyer's subsequent investigation was performed in an effort to provide his clients the best possible representation before the grand jury, and, potentially, at trial.
We therefore grant Lawyer's motion, and quash the subpoena in its entirety.